Life insurance is perhaps one of the most important personal investments an individual is going to make in their lives, and deciding on the right policy isn’t always easy. That is why it is crucial that you gain as much insight and knowledge regarding life insurance policies before you make your decision.
What is life insurance?
Life insurance is a policy you can put in place that will pay a beneficiary a sum of money once an insured individual has died. In other words, it will essentially ensure your loved ones will be financially secure in the event of your death. The financial cover is designed to help pay any debts and ensure your loved ones can afford to live without the income of the deceased.
Do I need life insurance?
If you have a mortgage, having life insurance can help clear the debt in the event of your death, and allow your loved ones to deal with the cost of day-to-day living. This is something to consider when taking out life insurance for the first time; most individuals will take out life insurance if they have a mortgage, so their loved ones are not burdened with their debt after they die. Beyond other compulsory payments, the beneficiaries of the insurance payment are free to use the money however they wish.
Check if your employer offers life insurance as an employee benefit
You may find that your employer offers group life insurance as part of your employee benefits package to ease any financial burden on your family in the event of your unexpected or early death. In this case, you may not need to take out a life insurance policy under your name. However, it is still worth shopping around to see if other policies might meet your needs better.
Don’t over-insure or under-insure yourself
Your life insurance policy should be pragmatic; calculate exactly how much your loved ones or beneficiaries would need to be financially secure should the worst happen. At the same time, don’t under-insure yourself: think about costs likely to arise in the future to make sure your family is comfortable – consider things such as whether your children will need university fees paid for, for example.
Read the small print
Contracts can be often difficult to navigate, so you need to make sure you know exactly what is and isn’t covered by your policy (exclusions). Also, note that definitions and exclusions can differ between different insurers. If you see something you don’t understand, ask the insurance provider, your insurance broker, or financial adviser so you are confident in what your policy is providing.
Ease of mind
Taking out a life insurance policy is an effective way to make sure that your family is financially secure once you’re gone. Whilst it may not always be on the forefront of your mind, it is important to critically research the different options available to you and take out a policy appropriate to your circumstance to ensure that everything runs smoothly for your beneficiaries in the event of a tragedy, so that you can live your life with peace of mind.